Analysis for 'Jupiter'

Pre-roll video ads' effectiveness and user acceptability is getting a boost from 3 different research studies this week. Results were released by Break/Panache and Tremor Media and by Jupiter Research, which focused on the European market. Taken together, they are an encouraging sign for the many broadband video providers who have chosen ad-supported over paid as their business model of choice.

A key highlight of all three reports concerns user acceptance and engagement with pre-roll ads. This format, whether 15 or 30 seconds, has accounted for the bulk of video ad revenues to date, and yet has been a key source of tension in the industry. Advertisers like pre-rolls because they feel like the well-understood TV model and in fact, where off-the-shelf TV ads are often just re-used (for better or worse). The downside of the interruptive pre-roll approach is that previous research has shown users hate the format. Contributing to users' feelings was the fact that many content providers have been undisciplined about implementing frequency caps or any sort of targeting (I myself have seen far too many tampon ads!).

Yet the Break/Panache results show that 78% of users viewed pre-roll ads for more than 15 seconds and the click-through rate averaged an impressive 10%. Similarly, the Tremor research showed completion rates for both 15 and 30 second ads of approximately 80%, a level it believes is reached because of its ad targeting and focusing on premium content only.

Meanwhile the story was about the same in Europe. According to Jupiter's research (as reported by AdAge), audience drop-off upon the introduction of pre-rolls is under 5%. Jupiter also makes the important point that at least 10% of users drop off after 15 seconds even when there's no ad present, simply because they're in channel surfing mode. That means some percentage of abandonment is due simply to behavior, not a specific ad type. This makes sense when you think about it.

I attribute much of these new positive results to users recalibrating their expectations about broadband video and the presence of ads. Here's what I think has happened:

Since the Internet's introduction, there's been a sense among users that "content is free." And with the exception of annoying popup ads, I think many users have learned to look past unrelated banner ads on standard web pages so they've come to perceive their whole online experience as largely "ad-free" as well. (If you don't believe me, ask yourself when you last clicked on a banner ad unrelated to your work.)

But as broadband video usage has grown, pre-roll ads that actually did interrupt the content experience felt jarring for many users. Naturally, when asked, users said, "ugh, we hate them." Fair enough. But consumers are smart, and have quickly recognized that, just like TV, to get high-quality video programming, someone has to pay, and since most users would rather that not be them, they've become more accepting of all ads, pre-rolls included. With premium sites employing some targeting now and becoming more judicious in their insertion practices (ABC.com and Hulu are great examples), users have become more accepting. Hence these positive research results.

To the extent that pre-roll business practices continue to improve, I think research will continue to show positive results. Whether you personally love pre-rolls or hate them, I see them very much here to stay.

Our Sponsors

About VideoNuze

VideoNuze is the authoritative online source for original analysis and news aggregation focused on the burgeoning online video industry. Founded in 2007 by Will Richmond, a 20-year veteran of the broadband, cable TV, content and technology industries, VideoNuze is read by executive-level decision-makers who need to get beyond the standard headlines and achieve a deep understanding of online video’s disruptive impact.